J.P. Morgan’s Earnings Get Lukewarm Reception

By Kevin Kingsbury

So the Chief Investment Office cost J.P. Morgan $4.4B on a pretax basis in the second-quarter, which was partially offset by $1B in pretax gains from the group’s corporate securities portfolio.

As such, second-quarter EPS handily topped analysts’ fears, but the stock is up a modest 0.8% premarket at $34.36. Investors may be more focused on the year-over-year slide in earnings, 8.7%, and revenue, which fell 17%.

Total losses in the CIO office were $5.1 billion in the first half.

CEO Jamie Dimon says the CIO’s total synthetic risk has been “significantly reduced” and “to a scale that allowed us to transfer substantially all remaining synthetic credit positions to the investment bank,” which will “effectively manage these positions and maximize economic value.”

Dimon notes the CIO won’t have a synthetic credit portfolio anymore “and will focus on its core mandate of conservatively investing excess deposits to earn a fair return.”

Meanwhile, the company appeared to show strong results elsewhere in the company, with solid loan, credit card and deposit growth. Behind the CIO, J.P. Morgan reported strong credit demand, including a 12% jump in credit-card usage, a 29% increase in mortgage originations and a 16% jump in commercial-banking loans.

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